Country report Portugal - Work Package 1 Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and the Cohesion Fund (CF)
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The economic and financial crisis which struck in 2008 severely affected the Portuguese economy, which had already been growing relatively slowly in the preceding years. In 2013, GDP in real terms was 7% below the level in 2007 and though it increased in both 2014 and 2015, growth averaged only just over 1% a year. Employment fell almost continuously and in 2013 amounted to only just over 65% of the population aged 20-64, 7 percentage points less than in 2007. In consequence, unemployment increased to 16% of the labour force in 2013, double the rate of 6 years earlier.
A further consequence of the recession was an increase in the budget deficit to nearly 10% of GDP in 2009 and leading to a series of fiscal consolidation measures being taken. These progressively reduced the deficit but it was still over 4% of GDP in 2015 when government debt had risen to 129% of GDP . Cutbacks in public investment were a major part of the consolidation measures and this together with the acute shortage of public finance led to increasing reliance on EU funding for development expenditure.
The combination of the crisis and the fiscal consolidation measures had the effect of narrowing regional disparities in GDP per head as non-Convergence regions were more severely affected than others.
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